Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by a property, allowing borrowers to draw funds up to an approved limit. This financial tool enables homeowners to access their home equity for various purposes.

Standalone HELOCs

A standalone HELOC is tied to a property with an active mortgage, and the HELOC and mortgage can be from different lenders. Franklin Mortgage offers 30-year and 20-year standalone HELOCs with various terms for interest-only payments and amortization periods.

Piggyback HELOCs

Also known as simultaneous close HELOCs, piggyback HELOCs are done at the same time as the first mortgage, typically used in purchase transactions for added financing convenience.

NQM Bank Statement HELOCs

The NQM Bank Statement HELOC program allows borrowers to qualify using a 12-month personal bank statement income assessment.

Franklin Mortgage’s HELOCs have no pre-payment penalties, with terms including 3-year or 5-year draw periods. These are available for primary residences, second homes, and investment properties, with specific appraisal and title requirements.

Both full-doc and bank statement options provide robust solutions for leveraging home equity for personal use, investment, or other financial needs. Franklin Mortgage’s offerings ensure borrowers have the flexibility to grow their financial portfolios.

HELOC Mortgage Loans: Everything You Need to Know

Franklin Mortgage Holdings, Inc. is committed to providing customized solutions to meet the unique needs of borrowers. One of the loan options we offer is the Home Equity Line of Credit (HELOC) mortgage loan, which is a popular choice for homeowners who need access to cash while still maintaining ownership of their property.

In this comprehensive guide, we will provide you with everything you need to know about HELOC mortgage loans, including their features, benefits, disadvantages, and how to qualify for one.

What is a HELOC Mortgage Loan?

A HELOC mortgage loan is a type of loan that allows homeowners to borrow money against the equity they have built in their homes. HELOC loans are similar to credit cards in that they provide a revolving line of credit that can be accessed as needed, allowing homeowners to borrow and repay multiple times during the loan term.

Features of a HELOC Mortgage Loan

Here are some of the features of a HELOC mortgage loan that you need to know:

Revolving line of credit: Unlike traditional mortgage loans, HELOC loans provide a revolving line of credit that can be accessed as needed.

Adjustable interest rates: HELOC loans usually have adjustable interest rates that fluctuate based on market conditions. This means that the interest rate on your HELOC loan may increase or decrease over time.

Draw period and repayment period: HELOC loans typically have a draw period of 5-10 years during which borrowers can access the line of credit, followed by a repayment period of 10-20 years.

Collateral: HELOC loans are secured by the borrower’s property, which serves as collateral for the loan. This means that if the borrower defaults on the loan, the lender may foreclose on the property.

Benefits of a HELOC Mortgage Loan

Here are some of the benefits of a HELOC mortgage loan:

Access to cash: HELOC loans allow homeowners to access the equity they have built in their homes, providing them with a source of cash that can be used for a variety of purposes.

Flexible borrowing: HELOC loans provide borrowers with a flexible borrowing option, allowing them to take out only what they need and repay it on their own schedule.

Lower interest rates: HELOC loans usually have lower interest rates than other types of loans, such as personal loans and credit cards, making them a more affordable borrowing option.

Disadvantages of a HELOC Mortgage Loan

Here are some of the disadvantages of a HELOC mortgage loan:

Variable interest rates: HELOC loans usually have adjustable interest rates that can increase over time, making it difficult for borrowers to budget for their monthly payments.

Risk of foreclosure: Because HELOC loans are secured by the borrower’s property, there is a risk of foreclosure if the borrower defaults on the loan.

Fees and closing costs: HELOC loans may come with fees and closing costs that can add up quickly, increasing the overall cost of the loan.

How to Qualify for a HELOC Mortgage Loan

To qualify for a HELOC mortgage loan, borrowers must meet the following requirements:

Equity in the property: Borrowers must have sufficient equity in their property to secure the loan.

Good credit: Borrowers must have a good credit score to qualify for a HELOC loan.

Proof of income: Borrowers must provide proof of income to show that they can repay the loan.

Property appraisal: Lenders may require a property appraisal to determine the value of the property.

If you’re considering a HELOC mortgage loan, contact Franklin Mortgage Holdings, Inc. Our team of experienced professionals can help you determine whether a HELOC loan is right for you and guide you through the application process. Don’t hesitate to reach out to us today!

Get A Mortgage Quote

Use our online tool to get a quick estimate.

Get A Quote